Oil-dependent South Sudan faces bleak economic prospects: World Bank
Simon Deng
The World Bank on Wednesday warned that the economy could weaken further following recent drop in oil production which remains the major earner of foreign exchange.
Joseph Mawejje, the leading economist for the World Bank in South Sudan, said that the economy contracted by 5.1 percent last year, adding that this year it could contract between 0.8 and 2.8 percent.
“We see that the (economic) recovery is going to be much weaker than initially anticipated, in the last fiscal year there was actually contraction of about 5.1 percent and now with oil production falling, our projection is that the economy could shrink further between 0.8 to 2.8 percent,” Mawejje said.
He was speaking during the launch of the report titled “Directions for Reforms: A Country Economic Memorandum for Recovery and Resilience in South Sudan at Palm Africa Hotel in Juba.
Mawejje disclosed that economy between 2012 and 2018 shrunk cumulatively by about 65 percent following heavy flooding that disrupted agriculture productivity and oil production activities in the northern oil fields.
Firas Raad, the World Bank Country Manager for South Sudan advised the political leadership to prioritize investments in agriculture and the oil sector to support recovery and resilience of the economy.
The economy is struggling currently due to high inflation that has seen the local South Sudan Pounds depreciate against the U.S dollar.
The SSP is exchanging at 48 with the dollar in the parallel market from the previous 42.
“Getting South Sudan to realize its potential will require steps aimed at consolidating peace and strengthening institutions, as well as targeted reforms tailored at harnessing South Sudan’s rich natural capital for development impact as first-order prerequisite for inclusive economic recovery,” Raad said.
Lual Deng, the Executive Director for the Juba-based think tank Ebony Center, said that the the government should properly exploit and utilize it’s huge natural resources to facilitate it’s economic recovery.
For example, Deng observed that agriculture remains the primary source for livelihoods in both urban and rural house-holds.
“We thought we are going to copy the Norwegian model of development but we deviated from it, one of the liberation objectives was to make agriculture the engine of economic growth and use oil revenue to fuel this engine of growth,” Deng said.
Lily Albino Akol, the Deputy Minister for Agriculture and Food Security, said that achieving peace and stability will definitely aid economic recovery after disruption by years of conflict since December 2013.
“Agriculture transformation is not only in productivity, we talked about human and social capital which are very important, and we cannot talk about value addition if we do not have adequate infrastructure,” Akol said.
